RBI imposes withdrawal limit of Rs 3,000 on Kapol Bank customers

Customers of Mumbai-headquartered Kapol Co-operative Bank will only be allowed to withdraw up to Rs 3,000 - irrespective of their total balance - according to a Reserve Bank of India directive.

“The Kapol Co-operative Bank will, without prior approval in writing from the RBI, also not able to grant or renew any loans and advances, make any investment, incur any liability including borrowal of funds and acceptance of fresh deposits, disburse or agree to disburse any payment whether in discharge of its liabilities and obligations or otherwise, enter into any compromise or arrangement and sell, transfer or otherwise dispose any of its properties or assets except as notified in the RBI directions dated March 30, 2017,” RBI said in a statement on its website.

The directions have been issued in connection with the bank's poor financial health. It does not mean that the bank's licence has been cancelled but restrictions will continue till its financial position improves. The central bank may consider modifications of these directions depending upon circumstances, RBI said.

A copy of the directions is displayed at the bank’s premises for public access.

In 2014, the RBI had banned premature withdrawal of fixed deposits from the bank and appointed an administrator to run its operations. The central bank superseded the bank's board of directors owing to concern over its conduct.

The bank's then director Hiren Mehta allegedly aided three businessmen in siphoning off Rs 14.50 crore by submitting bogus letters of credit. He was arrested in December 2013.

The bank has 2.5 lakh customers, 77,308 shareholders and 338 employees.

Kapol Co-operative Bank was founded in 1939 by Late Khushaldas Kurji Parekh with "an objective to service the downtrodden and economically weaker sections of the society", the bank says on its website.

Its last annual report for 2012-13 showed a profit of Rs 1.85 crore at the end of March 2013, down from Rs 2.88 crore the previous year.